US Labor Market Sees Significant Boost as Unemployment Rate Dips to 4.1%
The US job market experienced a substantial surge in September, with the unemployment rate dropping to 4.1% from 4.2% in August. This significant improvement reduces the likelihood of the Federal Reserve implementing large interest rate cuts in its remaining two meetings this year.
According to the Labor Department, the economy added 254,000 jobs last month, surpassing economists’ forecasts of 140,000 positions. The initial payrolls count for August was also revised upward to 159,000.
Market reaction was swift, with the S&P 500 E-minis rising 0.73%, the yield on benchmark US 10-year notes increasing to 3.934%, and the dollar index climbing 0.6%. The odds of a 25-basis point rate cut at the Fed’s November meeting jumped to 93% from 71% before the data release.
Analysts weighed in on the news, with Wasif Latif, President and Chief Investment Officer at Sarmaya Partners, noting that the strong report caught many by surprise and may reduce the need for future rate cuts. Peter Cardillo, Chief Market Economist at Spartan Capital Securities, described the report as a “blowout” that indicates economic activity will remain solid in the fourth quarter.
Gene Goldman, Chief Investment Officer at Cetera Investment Management, praised the report, saying it confirms the economy is on solid footing. Karl Schamotta, Chief Market Strategist at Corpay, went further, suggesting that a “no-landing scenario” for the US economy has become more plausible.
Other experts cautioned that the report may not be entirely accurate, citing potential revisions and seasonal factors. However, the overall consensus is that the labor market is strong, and the Fed may take a more cautious approach to easing policy.
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